Compare propane prices

When moving into a home that uses propane for energy it can be bewildering to discover how much prices offered by propane companies can vary. Overall, it is important to know that propane is measured by the gallon and priced per gallon. The 2011-2012 winter season saw average propane prices vary between $2.74 and $2.88 per gallon. This makes a 500-gallon tank cost between $1,100 and $1,150 to fill. The US Energy Information Administration puts the average American propane consumption 464 gallons or $1,325 per year at December 2011 prices.

What to look for when you compare propane prices

All this means is that when shopping around for a propane company and comparing propane prices between suppliers, you should not stop at the propane price per gallon but compare the various elements that can be included in – or excluded from – your propane supply agreement. Here are the basic categories to assist you in this task:

A very basic comparison between the United States’ three largest propane companies (Amerigas, Ferrellgas and Suburban Propane) gives you the average price per gallon of propane sold for each of them in 2011:

Source: 2011 company annual reports

However, this is but an average for average retail price. In practice, depending on various factors and how good a deal you have found, propane prices per gallon can vary by several dollars in the same area. This is why it is crucial to identify the services you require and get quotes from several companies to allow you to compare prices for your situation.

Propanedeal.com enquired as to the propane prices of these three companies for a large home in Ohio (which is relatively close to the US avergae in terms of pricing) using propane as a primary source of energy. For a first fill, this placed Ferrellgas (1.499 dollars per gallon) ahead of Amerigas (1.699 dollars per gallon) and Suburban Propane (1.799 dollars per gallon). For the next fill, however, Amerigas offered cheaper prices (2.099 dollars per gallon), ahead of Ferrellgas (2.370 dollars per gallon) and Suburban Propane (2.599 dollars per gallon).

Factors affecting residential propane prices

1 First, residential propane prices are dependent on crude oil prices since propane is a byproduct of natural gas and crude oil reprocessing.

2 Second, propane prices depend on propane spot prices: like many commodities, propane is traded on global markets and spot prices go up and down according to supply and demand.

3 Third, residential propane prices are affected by consumer supply and demand and prices will increase at times when people use more propane, like in winter.

4 Fourth, the price you pay for propane will be higher if you live further from one of the major supply sources (the Gulf Coast and the Midwest).

Source: US EIA

Factors included in the price propane companies offer

When offering customers a propane supply agreement, propane companies take several other factors into account. When comparing quotes from propane companies, look out for the various fees a company may charge for delivery, maintenance, administrative costs, etc. These services cost between $5 and $100 per item. For example, Amerigas, one of the largest propane companies in the United States, may include and charge for items such as fuel recovery, HazMat and safety compliance, late payment, propane pump-out, special trips, using the company meter of dispatching a technician in its offer.

Often, propane companies also offer discounts to new customers, which you should look out for too. For example, you may be offered some free propane to begin with (between 50 and 100 gallons) or propane at a discounted price (50 cents per gallon, on average). A propane company may also reward your paying your bill quickly by reducing the price per gallon by between 5 and 50 cents or your referring other customers to them (free amount of propane or a credit on your account).